CapitaLand Integrated Commercial Trust (C38U) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. A very warm welcome to those of you who have joined us here in this cherry multipurpose room on Level 20 of the newly completed CapitaSpring. Also a warm welcome to those of you joining us via the live webcast. I'm Mei Peng, the Head of Investor Relations for CapitaLand Integrated Commercial Trust or CICT. CICT has released its FY 2021 results this morning, and we are pleased to have this session with you. There will be a presentation by our CEO, followed by a question-and-answer session with the management team. For those on the webcast, you can submit your questions via the Ask Questions box on the screen. I'm pleased to now invite Mr. Tony Tan to share with us the details about CICT's performance. Tony, please?

Good morning, everyone, and good morning audience in the webcast. It's been a fresh year. I think it's been a long time since we meet in person. Very happy that we are able to do it now -- baby steps, not a big group, those are quite small audience here. But nevertheless, I think it's sort of a beginning to bring back the good old memories where we can have a large gathering. We just wanted to be cautious so that we still abide by the general guideline, and we try to get as much interaction with each one of you on an individual basis subsequently, right? So this morning, we announced the results. I -- what I propose to do is that I would probably not go through every single slide. Just touches on some of the highlights and some takeaways for you. So the results is a reflection of the -- in fact, the full year of the post-merger 2021. As you recall, 2020, we completed the merger in October. And hence, there's a little bit of noises in the number in 2020. In 2021, obviously, we are not completely out of the pandemic. There was also a little bit of noise here and there and coupled with the fact that we did some capital raising exercise, so there will be a noise, right? But nevertheless, the result is a combination of a few things. The full consolidation of the entire CCT portfolio. Some of the JV associates like Raffles City used to be treated as a joint venture. In 2021, it's fully consolidated as a subsidiary. So at the top line and the bottom line, you'll see that kind of impact, instead of getting the share of result on Raffles City. So the number looks no big jump, but the fact is that this is really a true -- we just put it together full year result comparing with a single REIT at some point of the year as well as part of it when the merger was completed in 2020, right? So let me just start just on a little bit on the second half. Second half, we achieved a DPU of 10.4 -- sorry, $0.0522. If you do for like-for-like, stripping out some of the actions that we had to take during the merger exercise, the second half of 2020, we actually registered $0.0573. It's not -- sorry, not here. But it would have been $0.0435 instead because we did a little bit of distribution retention in 2020 in first half and was all fully released in the second half. So it's not fully comparable. If you strip that out then though, the full comparable will be $0.0435 in second half 2020 compared to $0.0522, right? So nevertheless, we end the year with $0.104. Within the $0.104 also has a combination effect of the advanced distribution that we'll be paying today $0.045 as a result of the placement that we did in December and the remaining $0.037, which we are declaring and will be paid in March, right, okay. Some operational highlights. This is a overview. Portfolio occupancy 93.9%, came down slightly from last reporting, 94.4%. We'll give a little bit more color later. We have extended a little bit to 3.2 years. Tenant sales, I think we've seen a nice uplift. Of course, on a year-on-year, it's up by 12%, led by suburban. We've seen -- in fact, our first 2020, we have gone through the circuit breaker at a very low base. 2021, we had on-off different phases of restriction. So there's a little bit impact. But nevertheless, the overall impact is less severe than 2020. We clocked in about 12.2% improvement. Suburban mall went up, of course, is led by a higher recovery from the suburban mall than in downtown mall. On the office portfolio side, we've seen a creep up of our average rent, 10.33%. Stripping up, of course, in combination of some of the new leases that we signed as well as taking away the effect from the One George Street, so 2.6% higher. Valuation-wise, we've seen a little bit uplift, 3.5% overall. Retail side, fairly mixed. We've seen a -- obviously, on the back of a general more positive outlook from a retail point of view, but is not event. For example, for IMM, it's done very, very well. So we're seeing a little bit of uplift despite a 1-year reduction in the remaining 9-year tenure. We took a bit of -- took down a little bit of valuation from Clarke Quay as we embark on a journey to reposition Clarke Quay. So factoring the potential CapEx that we spent, we took down a little bit. Now, office side is a bit more positive. Generally, the -- I think the outlook has been improving throughout. If you've seen some of the reports from the [indiscernible] on a quarter-to-quarter since the market rent has sort of bottomed around first quarter. Second and fourth quarter, I think, has been seeing a little bit of improvement in terms of the market rent. So some uplift, office assets, led by a few things. 21 CQ, 21 CQ is a major uplift on the back of an improving outlook in the market generally. And of course, 21 CQ, we only fully completed with TOP in 2021. So factoring all the cost remaining that was not flushed out. Today, I think, after flushing out the cost, we've seen a little bit uplift. We also took a little bit of a markdown in Galileo, which is the German asset, factoring the Commerzbank's impending departure in 2024. And of course, we have been looking at various options and plans to essentially manage this departure. So we took down a little bit. That's under the office side, right? But we've seen an uplift in MAC, which is the other German asset. So it's all mitigated overall. But overall, in Germany is a little bit of markdown, yes. On the integrated development, which comprises CapitaSpring, Plaza Singapura, Funan, RCS, I think most of that has gotten a bit of uplift. The major one is CapitaSpring, which TOP -- so is -- previously was the value on a -- still on a development basis. We call it POD, under development, upon TOP's value on operating assets. So we see an uplift there. Plaza, we are seeing a little bit of uplift as well on the improved sentiment, I mentioned earlier. Funan also seen a little bit of uplift as well, more on the office component. But we did a little bit of markdown on Raffles City, predominantly on the retail side. It's the same principle. We are going through that journey to reposition Raffles City. The Robinson space is critical catalyst, but it will be -- it will take some time, and hence, factoring the CapEx and factoring in -- the value a little bit uncertain how that recovery will pan out. Hence, there's a little bit of markdown. But overall on a net basis, still a healthy 3.5% uplift in the valuation, yes. CapitaSpring, we achieved 91% -- 95% committed leases. We have about another 5% or so around that -- under discussion. So hopefully, that will transform to some real signing. I think where you're seated now, you have -- for JP colleagues who are here, I think they have the privilege to see this for a while. For some of you it maybe first time. They told there will be property tour, so they have a better view of what this property is about, right? Overall, I think must be quite pleased. And I think maybe JP can also vouch for us. It's a good quality product, yes. And so this fourth quarter, a couple of things happened. One of us, of course, the TOP of 21 CQ, TOP of CapitaSpring, where you are now. We also started a little bit of a journey to position some of the assets a bit more challenging. So the likes of Raffles City, Clarke Quay, we've actually activated the plan to transform it. Clarke Quay was depending some regulatory go ahead. We are looking to fine tuning some plans. But certainly, Raffles City and Clarke Quay will go through a series of adjustments. Funan, they thought there will be a slide -- in the other part, if you have no chance to visit the other part, it's opened up, it's announced in the news, very beautiful. It has created a bit of buzz, and we're seeing some nice footfall coming back to Funan, right? Fourth quarter was also a landmark in the sense that we -- I think I've mentioned a couple of times because I get a lot of questions, why are you going to do post-merger, and one of the few things that we have been saying that we have to look at their core portfolio in totality and look at it from a short, medium and long-term perspective of what you want CICT to be. So in fourth quarter, we started this journey by monetizing some of the assets. I think I flagged out before, we wouldn't work monetizing some assets. We've done that on One George Street. We saw a 3.17% yield, and we are redeploying into a new market, Australia, Sydney, to be very specific Sydney. Why Sydney? I think we see a lot of parallel between Sydney, Australia, and Singapore, going through that journey of managing the crisis that we are going through now. Some locality specific issue factors like the transformation on the CBD in Sydney, I think, is also going to be exciting in the long run. And Sydney is a very liquid market. So we take a lot of comfort, very transparent, very liquid market, probably going through adjustment. In the long run, I think it is going to be a good market to be in. So today, we think that it's quite timely. And I say why? Because we are putting 5, 10 years down the road. If CICT were to embark into a journey where we want this vehicle, on the one hand very Singapore focus, because that's why where is the demand. They want a high concentration exposure to Singapore. Putting through CCT and CMT together give them 100% -- almost 100% concentration. But 100% concentration on a large base, the challenge is obviously keeping that growth given the limitation in size of Singapore. So in the long run, we need to have -- find new engine. And these few actions we are taking essentially are setting beachhead. So we are starting a base in Germany. We try to find opportunity for us to deepen our presence there. We're also starting a base in Australia, Sydney, in the long run, hopefully, give us the additional engine. So it's like setting out the beachhead, right? Whether we get it right only time will tell. Based on our own assessment, we think these 2 markets is good. We have been also looking at Germany to expand our presence there. Not easy to find, not true. It's right, not easy to find. After certain years of assessment, we had to come to some landing. Is this still the market to be in? If not, we also wouldn't -- exiting the market. I mean, I want to be very frank, right? But it's at least I think a base, give us a chance to look at opportunity while we try to further anchor our position in Singapore. So Singapore will be very core. It's quite visible some of the potential opportunity that they will be coming down the road in the next 1 or 2 years. So we try to seize the opportunity as much as possible while we build the base. We know that actually as your base gets bigger and bigger in future a few things will happen. You get a very chunky impact from any single of the assets. And if you're going to depend on wholly Singapore for the only source of opportunity for growth then it can be very challenging, right? So this is our assessment. So we started this journey fourth quarter. And also articulated a couple of times, please do not look at 1 transaction in isolation. It is going to be a series of transactions. We have demonstrated that OGS divestment and redeployment in Australia. And then more recently, we just announced the divestment on JCube. So we are looking at opportunity to redeploy. So we get a little bit of feedback why Australia? Again, I think this is a little bit of background. But I can take comfort that the next opportunity we're looking at is Singapore. So we are assessing quite closely, yes. So JCube, I won't say too much, just take note that actually this is done through a proper process, done through a bidding process. It has so happened that our [indiscernible] company, CapitaLand Development, came up on top. I mean, it just [indiscernible], so -- but I think we've done a good price. Naturally, we have also explored and studied whether we could potentially redevelop that. In our own assessment, I think -- and of course, there will be some consultation with the authority. The best use case would likely have to have component of residential, right? And if that's going to be the case, and it's all subject to approval, right, then likely, we can't participate because if you look at the land size it's not easy to cut it up into a specific, like the way we've done it for Funan. One part is actually the service resident component, the other part is the commercial office side, so not so easy. So when we go into that sales process, I think the bidders are aware. We are very transparent. You see we did explore options. The best use will have the residential component, so they'll price accordingly, which is why we're able to get 22% uplift in the divestment price. Financial result, I have mentioned earlier, I don't think I want to belabor that too much. So this is how we're going to present. So when Australia, as the acquisition is completed, you'll see a little bit high over there. I think it will add us about another 5% or so, yes. As a result of the valuation uplift, our NAV now is $2.06 from -- I think it was $2 -- $2.01, sorry, to $2.06. [indiscernible], so I think I get some questions already from [indiscernible]. Rest assured, the $1.1 billion, even if it's a crisis today, it's fully funded, right? We have enough lines to do it. So that's okay. But obviously, we have other strategy in place, including looking at opportunity and you will find that -- from a M&A perspective, right, opportunity, and we will find the appropriate structure to also at the same time take off some of the debt as well, yes. I think we will leave that for FAQ. So the takeaway is that the -- we have sufficient line to fund the 2.02 -- sorry, the $1.1 billion in 2022. We are also quite protected. 84% of our debt is fixed, right? So the debt due in 2022 is on the north of 3% interest. So we still have opportunity potentially to get some savings if we get it right, yes. So this one, some [indiscernible], I think rating agency will be very interested to see. The gearings came down to 37%, a combination of our divestment proceeds coming from One George Street. We prefunded the acquisition -- equity requirement for the acquisition in Australia. It's not completed yet. And hence, the gearing goes down to 37%. Once the 3 assets in Austria is completed, the gearing will probably go up to about -- slightly above 40%, thereabout, yes. And of course, this has not factored in the JCube divestment, which we expect to complete in first quarter as well. Well, I think straightforward 18.3% overall. This is on a portfolio basis -- sorry, on basically presented on a portfolio based on different components [indiscernible], right? It's gone a little bit higher from 3 years to 3.2 years as we get more and more leases signed. Let me see, let me just run through some of the things. So retail, I think a bit of questions. I think we have a benefit of not being the first one to be out. So since our [indiscernible] performance as well. Overall, I think the -- since -- like I mentioned from the beginning, especially from fourth Q onwards we've seen a -- quite a good pick up in terms of the footfall and the sales. December has done well from -- especially for suburban, December has done well. Suburban actually has tracked above the 2019 already, right? So it's quite similar to what you hear from our other peers. Downtown also recovered, albeit lower, and also quite mixed. Within our Downtown portfolio, we have Raffles City, for example. Raffles City was impacted quite significantly last year. This year, I think the recovery is a bit uplift, higher. In fact, the footfall has recovered quite nicely, right? I'll tell you a little bit more later on, but this is snapshot view overall. So compared to 2020 year-on-year, I think sales are almost flat, almost 100%. Rental reversion, I did -- I think I did mention in our briefing before, I think we've seen the gap narrowing between the -- of course, the reversion is still negative, especially for Downtown, but it's narrowing. We are already signing leases higher for suburban mall. So probably quite similar to some of the things you're hearing from our other peers, yes. So the gap is narrowing. Occupancy, the main drag is, of course, Clarke Quay, which I did mention earlier, we are going through that journey to do the transformation. So we put that -- if we put that out, I think the rest are seeing a reasonably healthy, stable improvement in occupancy. So Raffles City -- just touch on to elaborate. Raffles City as of 31st December, that 1 assembly, which is where the collaboration with BHG is still in play. So they expire in January. So that would drop, right? So that space will be taken out. In fact, we are about to start the AI work, right? Today, visited Raffles City, the whole place is in -- the Robinson space has been already hotted up, yes. Leasing momentum is picking up nicely in the space there. Today, we have -- looking -- we're looking at close to about 29%, 30% of already interest. Some of them already signed, some of them are looking at more details, yes. In terms of timing, we're looking at probably third Q. Hopefully, we can complete Raffles City, the AI and be ready by fourth Q, which is traditionally the peak shopping season. Revision number, like what I say, I think it's narrowing, like suburban mall is already tracking above the average -- on average -- on average basis is already higher than we are going, yes. Retail expiry quite a fair bit in 2022, quite a few anchor -- major anchor that we are negotiating now. I think, overall, the traction is that we just haven't nailed down the signing yet. So that's been taken care of quite a fair bit, I would say, split half in the -- most probably between first half and second half, but we are already working on it. This is a trend. I wouldn't mention too much unless any other things to add, let me see. Yes, and actually, the December month was quite nice. We've seen an uplift in sales, whether it's in dollar value or in per square foot, suburban mall is obviously above 2019 level, especially in December, a nice uplift. Downtown mall is still a bit behind. We are probably about 85% there in December. Trade category improvement is across the board, except for the few. I mean majority [indiscernible] across the board -- majority seeing quite improvement on a year-on-year, which is quite natural because last year was a low base, right? Yes. Let me jump to office. This is a snapshot view. Overall, I think occupancy is 91.5%, so a bit lower, but there's some reasons behind. Let me elaborate to you subsequently. Office rent average has gone up 10.33% like I mentioned earlier. In fourth Q, still leasing interest. But as we go into the festive period saw a wind down, but we are seeing things starting to come back up again in January, right? So there is a little bit more color. So if you notice Asia Square Tower 2, now we have gone back up above 95% with the signing of a major business consultancy firm. So we are in the process of preparing for handover. So we should be able to start recognizing the revenue probably some time in second quarter of second -- third quarter and thereabout. But the cash flow will come later because they will need some time to do the fit down. So there will be a bit of fit-out period given, granted. So NPI will be there, but the cash flow will come later, right? Capital Tower to down JP space, we are already in a very advanced discussion. We have won a major occupier that will pick up quite a big chunk of JP space. With that in, if we conclude and seal, therein we are looking at probably close to 94%. So we hope that, that can happen in first quarter. Six Battery Road, we also -- in fact, post 31st December -- we can say it, right, we actually concluded a lease. You should see that we're going up to close to about 90%, yes. CapitaSpring, I did mention about 5%, under discussion, various forms of discussions. Some are more advanced than others. Hopefully, by first quarter, we can close some as well. So I mean, things are moving in the right momentum. As of 31st December cut-off time, some of the deal hasn't been concluded, yes. Signing, still, again, above the market rent overall as the -- I think as the sentiment improves, I think, we're signing a little bit better now. This one, I don't talk about. Those are some of the things I already covered. It is a little bit overlap, right? Aspiring leases '22, of course, you see the major low level is Capital Tower. Overall, our sensing is that it will be -- if you take these 4 assets, the predominant ones in place, we hope to be in a positive range. But predominantly we'll be uplifted by Capital Tower, right? Capital Tower coming from [indiscernible] base, I think we have already concluded the deal in January. So you'll see an uplift in terms of reversion, yes. '23, '24 is too early, I won't say anything about that. Occupancy for the [indiscernible], CapitaSpring is the one I mentioned that. Hopefully, we can conclude that. The rest, quite straightforward. [indiscernible] 5 years is pretty long, okay. So the rest, I don't think I want to talk too much. Six Battery Road, there is a little bit of delay on the TOP. We are looking at somewhere first quarter. There are some minor things we need to fulfill the authorities' request, so we are looking into it. So we are just looking at around February or March, thereabout, yes. 21 CQ [indiscernible] so like I mentioned, the TOP happened in 2021. They are doing the fit-out now. We started recognizing revenue, but the cash flows will come in more meaningfully in second quarter -- second half, not necessarily, second quarter onwards, yes. So in a nutshell, especially for the office assets where they tend to have a longer lead time from the fit-out period, there will be a timing difference between recognition of revenue because you have to straight line based on counting by the actual cash flow coming in, right? More meaningfully from second half we'll see more and more cash flow will start coming in from CapitaSpring, from 21 CQ, and some of them from 6 Battery Road as well, yes. This is a leg I talk about Funan, okay? I think the rest for you to read, I don't want to talk too much about it. These are the things we do on a day-to-day. ECG as usual very important, and investors are demanding action, more action, so we are demonstrating that. Strategy, already I cover a bit, what I want to do. We were -- on this journey, it will be a journey that will stress probably in the next 1 or 2 years, yes. Overall outlook remain positive. The -- I think it's quite common understanding that this wave of the Corona impact seems to be milder. So I think the confidence level naturally has been growing, right? Of course, now with the new Fed posturing interest rate, how that will affect the overall wider economy, I mean that's yet to be seen. But January, the consumer sentiment seems to be very positive. The unemployment [indiscernible] is very healthy and job creation here is pretty healthy both in Singapore, in fact, also in market that we are watching now, like even in Germany and Sydney -- in Australia. I think the mood generally has been improving, yes. So the rest, I would leave it for you all to reach you, and feel free to come back to us you have any other questions, those things that I did not elaborate here. So I'm open to questions . Thanks.

Thank you, Tony. Before we start the Q&A session, I would like to introduce the team on the panel with Tony. We have Ms. Wong Mei Lian, our Chief Financial Officer, seated on Tony's right; and Ms. Jacqueline Lee, Head of Investment and Portfolio Management, seated on Tony's left. So before we start, also, please note that we will take the questions from those present today first. And in between, I will ask the questions from those on the webcast. And if we did not manage to address all the questions on the webcast, we will get back to you after the briefing. So for those present, you can raise your hand, and yes, we'll pass you a mic. So may we have the first question, please?

Maybe start with the retail business first in terms of rental reversions. The cost going forward should be less negative this year. And for the suburban side, there's about 0.2 positive on an average basis. Will that -- the suburban side, do you think it's going to be maintained at a flattish level or you think it will push it higher plus 1% or 2% for the remainder of the year? In terms of second question, any updates in terms of backfilling the space at -- second question is in terms of Germany, the Commerzbank build on, any updates in terms of backfilling that space?

Okay. Sure. So our expectation is that the reversion should improve suburban more. I think we are quite resilient. Well, as the economy reopened and all the COVID measure eases further, which we expect will happen, then you'll see more and more. There will be a bit of a reversal. I think downtown will probably see better recovery on the back of a lower base, obviously, right? And whether -- how that will affect the suburban, I think it's going to be quite mixed. It depends -- each asset will have their own unique feature. I give you an example, I think quite -- we are quite clear, our top performance during the whole last 2 year is BPP, suburban, very local. Last 2 years, we've been tracking above the 2019 level, even though the traffic is slightly lower. As the measure eases, we are seeing a little bit reverse, right, coming down now the [ host ] is spread out to a different mall in downtown. It will be uplift from Downtown Mall. So I think potentially, may see a bit of an impact coming through. Some of the malls in suburban for the likes of IMM, actually, it's -- to me, it's a bit more fair weather generally because it is quite unique is suburban in location, but yet it's actually pan-island wide catchment because it's an outlet mall, it's also a -- you can say it's a neighborhood mall because you satisfy your own neighborhood requirement, right? The basic day-to-day necessity shopping. So it's a one-stop shop that so satisfy almost the entire catchment. So that one is being very well and doing quite okay. In downtown, Raffles City is in a nice uplift because the base was low. 2020, it was quite badly hit. 2021, we've seen a uplift. We'll probably continue to see an uplift even though we are doing that repositioning work. As more and more people return to office, we are seeing that traction really. And as the travel resume further, so we are seeing business travel starting to come in even -- although not in a big way, but that will certainly give a little bit of a boost in downtown, yes. So I suspect from a reversion -- or back to your first question, I would say suburban mall may continue to be the lead with a better signing because it's very resilient, but probably will be quite a low one. Hopefully, you can see a better conversion from some of the, especially from the Downtown Mall, where we actually restructured some rent, taking a little bit of risk together with tenants. We bring down the fixed rent and then uplift component. So those leases, if they are up for renewal in 2022 or 2023, hopefully, those will see a little bit uplift, yes. Commerzbank, interestingly, I think we are -- when we started, actually we have put in place a team to look at various options, including potentially a major area, right? So -- and Germany, of course, now is still in a lockdown. We -- so we are testing out in the market. We are getting quite a bit of interest -- reverse interest. So we are looking to some RFP. There were interest from single occupier, not many, there was one. That one has further interest. We are looking at it. There's also interest from a couple of names who are, I will call, mini anchor. They won't take up their full space, maybe they take up 20%, 30% of the space. So we are looking to the various options, yes. We -- concurrently, we will look at how we want to deal with Commerzbank. Depends on the prospects that we talked to in terms of timing. If Commerzbank's -- because Commerzbank officially will return the space to us in January 2024. But there could be some flexibility of early return if the, let's say, like prospects incoming so require it. So I think those are a little bit more detail that we had to work through. So to answer your question, yes, we are looking at it. It could be a combination of a potential scenario, whether one single occupier or a multi-tenanted occupier, yes.

I think next one is Rachel Tan.

Can you hear me?

Yes, louder.

Okay. I'll speak louder then. Okay. My first question is on the Robinson space. If you could give us some color, how you're going to fill it? Are you going to look for anchor tenants? Are you going to cut that into a smaller space? And also, any updates on Marks & Spencer? Is that included in the 111,000 square feet refurbishments as well? And then my second question is with the divestments of JCube, are you seeing in your portfolio there will be more of such divestments? Any other -- is it retail malls or office that we are looking at that could be potentially divested?

Okay. So Robinson space, yes, we are filling -- trying to fill up. There will be some mini-anchors, there'll be some mini anchors we are talking to. You see a little bit of color before -- I mean, when Robinson was still intact and when you were operating at a good healthy level, one of the key strengths in Robinson's operation is really cosmetic. So we're going to retain quite a fair bit of them at Level 1, right? So that's how seller [indiscernible] positioning, plus some new coming on. Because it's an important cluster to anchor, you want to differentiate Raffles City, that's one area that we think is important to anchor, yes. So that will set the base. In terms of positioning, it will probably, on an overall basis, one step up, not a significant step up. We are probably not in the Gucci level or Prada level. we are probably one or two step below. So we're looking at the kind of positioning, yes. Marks & Spencer, yes, is included. In fact, Marks & Spencer will resurface. They will resurface, yes. Divestment, we always look at our portfolio. We don't want to nail down any single one. We always had inquiries, and we have people come and whether through agent or through some direct, where they're interested, we will monetize. I think we'll look at it appropriately, take into consideration the early deployment as well, yes.

Yes. I think Donald is here.

It's Donald from Bank of America. A few questions for me. First, the guidance this quarter, pretty positive on the leasing up other spaces. Could you guide whether these are more relocation or new tenants? So net-net, is there more of a positive absorption? Or is it more of a [ musical chair ]? That's my first question. Yes. Second is on acquisition. So you mentioned Singapore will be mix. Any imminent ones that we should be looking at more from sponsor, or are you looking at third party? And related to that is, you mentioned that you're getting -- you're always getting interest from buyers, right? Are the buyers now getting more interested in office? Or is the interest coming back also in retail or both?

Okay. So first question, relocation or new tenant, a mix of both. Relocation, we've seen relocation requirement started with a view to shrink, that means they are relocating from existing location, but on the reduction of space. So that's one combination. New tenants are really new. We're going to hear more and more migration from other markets coming, yes. So those are a few, but we've also seen expansion. I mean setting up really new setup here, and they have an aggressive expansion plan. So one potential perspective on discussion is on the expansion mode in Capital Tower, the space that they are vacating, yes. Second question, whether it's sponsored third party. Both, we look at both. I mean all at the end about the commercial, the commercial terms, right? So we look at both of them. Getting interest, both in fact. We get people interested in our retail mall, also have people interested in our office building, yes.

Tony, you mentioned migration for Alibaba [indiscernible].

A little bit, yes, yes. Yes. Questions -- I mean, they are looking at -- some of them are -- it's already happened, increasing coverage, increasing the coverage of here -- some of them are literally potentially moving, yes.

[ More than 2019? ]

2019, I don't have the -- during the other, right.

Yes.

Yes, yes, yes.

Okay. And Joy.

It's first actually.

Sorry. Joy from HSBC. Just some questions on -- maybe just a follow-on on office first. Could you just share a little bit in terms of signing rents and sort of trajectory of rents you are negotiating versus what you have been signing last year? And then just also on retail, if you could share a little bit about sort of demand, we see sort of what subsectors are we seeing demand? Are we seeing -- so do we see some revival of fashions and the traditional retail sectors coming back as well? And just lastly, I think, if you could just give us a bit of guidance on interest rate movements and your sort of interest rate refinancing plan, what you see in terms of spreads, et cetera?

Okay. Signing rent is creeping up. But of course, it depends on property to property, right, quite specific. I think earlier I did mention [indiscernible] possibly may see a positive reversion overall as a portfolio. Across the other few key buildings, hopefully, we cannot achieve too far off. I think a lot of -- notwithstanding there are some relocation and some downsizing. There are still a lot of company worth looking at the context of the general economic environment, there are uncertainties still out there. Most of them prefer to extend, yes, so extend existing location, right? So those potentially could be the one that hopefully we could at least achieve a neutral position, yes. So that's from a signing position. So building to building a different line because there are specs, the competition for this building would be different for another building. Retail subsector fashion, there'll be a revival, you're right, a different kind of fashion. F&B has always been there. So we have casualty in F&B, but we also have new ideas that are coming up. So I think that's not any different from what we see in the past. So F&B will still have some interest. We -- other areas that are more -- I think some of the basic -- especially in down, we are seeing more and more. For example, we signed up recently a interesting concept is -- it's not Don Donki equivalent. It is not your supermarket equivalent, but it's actually a general merchandise market, but specialized in perhaps certain geography. It could be like your Korean specific team, could be your Japanese specific team. So those seems to gain a little bit of traction, so we get some signing as well, yes. Not a big space, but they are not small. They are not your shop like [ UniSA ]. Like it can be a 2,000, 3,000 square feet or 4,000 square feet kind of space, potentially, yes. Then if you look at whether the F&B new concept coming in, they are. But the problem is, of course, especially for foreign concept, the traveling part is still a bit of constraint. So going down to the site to view, the interest is there. But going down the site view, it's a bit more challenging. We do remotely is very different. We're working around the scene. So that one, hopefully, when more travel measures are lifted, then we see a bit more, okay, intense interest coming in. So F&B, I think, will be another area that we look at, yes. Mixture of F&B and non-F&B but more F&B yes, yes. Some of them are looking at setting up -- so they may not be new, but they have already set up non-F&B. They're setting up their presence in key shopping precinct, like Orchard Road. So now looking at outside their main key presence, so suburban location and [ the IP ] as well, yes. Those are non-F&B.

The third question, sorry. I think she has one more question about the interest rate.

Interest rate, maybe I'll let Mei Lian split.

No. I think we all know that we are on the rising rate environment. At 83% fixed, we actually are highest fixed ratio on the [indiscernible]. And looking at the -- this composition, I think we intend to keep this combination of at least 80% fixed. In terms of the refinancing plan, we are actually looking at actively at some of the loans that's due in 2022 where possible. On the portion that's fixed, that would be something that we have to weigh, because we have to weigh the cost of early refile, yes, on the balance sheet. In terms of credit spread, what we are seeing is the current environment actually sort of benefit us in terms of the flight to quality. We are still continuing to see that credit spread and continue to enjoy the credit spread from the bank's perspective. Yes.

[indiscernible]

Means spreads, spreads.

Fixed rate. Range, depends on [indiscernible].

Yes, yes.

It used to be in the low 2%, 2.5%. Now you shift to the other bucket, yes, for the same panel, let's say, in the 7 to 10 years.

Or in fixed -- that's a fixed rate, not just spread.

It's purely the swap rate, the yield curve has steepened a little bit, yes.

Xuan?

Tan Xuan here from Goldman. Two questions here. First is on redeployment of JCube proceeds. How are you currently thinking in terms of suitability of 79 Robinson or balancing CapitaSpring or ION? And second question is what's the pressure -- any pressure on NPI margin given inflation?

Good question. So 79 RR, CapitaSpring, ION, hopefully, everyone. Of course, we have to look at the -- and each one has got partners. So it's not an outright sponsor straightforward the other. So it's actually involving the sponsor having to source future partners. So that's one consideration. In terms of maturity, we see ION is very mature. It's been around -- I mean it's been operating for 10 years -- 10 plus years, and all 9 are open. 79 RR completed already in 2019, just before onset of COVID. And physically, I think operationally, more than 1 year. CapitaSpring is very new. We have the options. We -- I think, studied that. We have the option to buy all of the sponsor stakes, yes. So I can't pinpoint which, timing-wise. But all are possible. NPI margin, yes, I think there will be a bit of cost pressure coming from -- okay, if you compare 2021, cost was contained to a large extent because occupancy was low, especially in the office side. So your energy consumption is lower. 2022, more and more people coming back. We expect energy consumption to go up and coupled with a heightened energy pricing level, the tariff will be higher. So I think that cost pressure will come from the utility bill, more the energy side. Just for a point of reference, I think roughly other OpEx utility constitute about 8%, 9% of the OpEx, yes. So I think we're seeing a bit of pressure on the energy side. It is volatile, it's been fluctuating, between 35% to 40%, 50% higher in terms of energy costs, yes. So that's one key point. The other part hopefully is linked to inflation. And hopefully, inflation will link to a higher rent. You probably have seen -- if you go to your day-to-day consumption, I mean, you've seen prices are moving up. So even -- our surprise even at more that -- the hawker center, the price has gone up as well. So I think that will translate to either GTO higher or eventually when the rent is up for expiry, we'll see a bit of adjustment as well, yes. So hopefully, there will be enough to cover that [ by coinvest ] for sure. So the other one that's -- from a cost point of view, is maintenance costs. So at older building, during COVID, we did [indiscernible] opportunity to fix it but not all. So some of the building, we deferred a little bit, but it's timely to relocate it. So we may have to step up on some of the maintenance as well, yes.

Okay. Can I ask one couple of questions from the webcast list, okay? So we have DBS, Derek asking, are we able to get a sense on potential rental assistance in 2022? And how many months were granted in 2021? Given that retailers are also just starting to see an improvement in performance, how much can we push rents higher?

As of now, probably too early to say. But we -- whatever we assist them with, we need to give to the tenant in 2021, we have done so. Yes. I think we reported about $27 million in total, combination of mandatory one, about $22 million. The remaining is our voluntary. We give -- because we support tenant in our own way, right? So $27 million probably slightly north of half a month of the retail rent, yes. The other question is?

The other question is about are we able to push rents higher?

We wish higher, obviously. Well, of course, I think we -- you must understand the rent structure would go through a bit of a series of evaluation especially when -- to what extent the transaction from the e-commerce side will stay sticky, right? So we want to be able to have that flexibility. Tenant retention is, of course, important. At the same time, having a good judgment call on the appropriate occupancy cost ratio for any specific trade is important. That's how you look at the overall cost, whether you want to pack it at a fixed -- at a certain level and then you share the upside at certain level. So I think that's important, right? So we look at it from a total point of view. So sometimes the reversion, the way you manage it, is always on the base rent, right? We look at the base rent. And we compare the base rent against our win -- compare the base rent against average. But the variable component is evolving. You can have the plus component or you can all open a component. So every trick will be quite different. And to what extent that plus component can be compensated is a value of judgment call. How quick -- let's say this specific tenant today trading at maybe 90% on pre-COVID, so we say, okay, let's have a readjustment or fixed rent. But on an overall total basis, we -- if you can ramp it up, your sales, to catch up, we want that percentage to catch up to the 100% level on a total gross basis as much as possible. So that's how we look at it. But from a reporting point of view, you will see a bit of distortion, this is our rental reversion number. But on a total rent basis, sometimes we are not worse off -- and we've seen cases of tenant that we retain with a restructured rent, but we push the sales side. Eventually, on a total basis, we still get higher. Of course, there will be some that we get lower, but it's a judgment call, yes. So that's a question very difficult to answer, reversion. But if you will measure purely on fixed to fixed outgoing, incoming and fixed average or average, average, hopefully, you can achieve a positive number. Because it's in a way a reflection of whether the market is stabilizing -- the retailer sentiment is stabilizing to a point where they are confident enough to say, okay, this is the amount we are prepared to pay, yes.

Sorry, can we hand you with the mic?

I was going to talk about the lease structures as well because in one of your slides, you have the GTO that's higher [ 10% ]. So are you planning to increase the GTO?

Yes. So I think it's property to property. For the life of CQ, it's going to work in progress because I think mentioned, we still have not started the work here, waiting for final authority clearance. So in the meantime, those tenants that we want to retain, we have to restructure the rent. So [indiscernible] purely just paying on a fixed basis, they're just paying on the utility, the service charges, right? But we pack in a turnover. So the plus term will come in. So it varies a lot, right? By and large, you can say a large part of our retail property, we're seeing between maybe between 4% to 10%, thereabout percentage so -- from a GTO component of the particular most contribution, yes, of the retail rent. Yes.

You've said -- in one of the slides, you said that you get more than $100 million of revenue from your CapitaStar program. Is that correct? And then...

Sorry?

From a CapitaStar program, there's a more -- so how do you share -- some of them are like on the e-commerce side and some of them on the physical side. So what is the portion of the e-commerce now and have you...

Okay. So let me put things in context. CapitaStar is a platform, yes. It's a platform loyalty program with embedded functionality, right. So main source of utility we use is to for the tenant and the shopper to register, especially for shoppers, you have to register your points, right? And then from there, you can convert that into your vouchers, e-vouchers, and as a basis of paying to the tenant. So that's one function. So through that, they have embedded the CapitaStar. So it's an app in app, right, CapitaStar is in -- within it. So caps -- sorry, the Capita3Eats eCapitaMall is separate. But eCapita3Eats -- eCapitaMall is part of the whole E space ecosystem that we're trying to get into. And one of which is e-enable the shopper to earn the point in electronic form and then convert that into electronic dollars. Last year, the e-voucher equivalent, physical and digital, is about a little more than $100 million, right? So that part of it, some of them come from the direct purchase from corporates. They are programs they -- maybe they support their own -- it can be an insurance company, incentive to their agents. And then agents will pass it on to their own customers, for example. So those will be spent in a mall, so it'd be a part of the GTO, right? So if you go to the mall, you spend at the cashier, you use a e-voucher, tap, it goes into GTO. So it goes to the GTO computation. So it all depends on whether the GTO of the particular tenant falls under the plus category or the all category, that rate will apply. That's how we earn the rental revenue. So $100 million will definitely go back to the turnover GTO. The other part is the e-mall, the eCapitaMall where they transact. So there is evolution. It's going through a bit of evolution. Our ideal situation is that actually, the whole thing is we want tenant to have the alternative source of reaching out to customers, right? And then they attribute their sales to their particular store. So we get the GTO sales. So that transaction could particularly point -- of course you don't release physically, go down to the specific store to collect, you can do that. But if the customer choose to offer a home delivery, that technically can come from anywhere for the same brand, depending on what they buy, right? We hope that tool will help tenant a few. One is visibility, improved visibility because we already have that 1.2 million-plus member that will potentially be able to utilize that. But at the same time, also help shopper to have the optionality. Sometimes they may not want to have the delivery services. They want to have the opt-in to collect. Then we can potentially incentivize them to come to our shop that are in our mall with certain incentive program, whether it's a marketing dollar, whether it's through the CapitaStar points. So that -- those are incentives. So it's all been embedded in the system. So this whole idea, yes, but granted that volume is not higher, yes.

Okay. My third question is on the -- on this building. So can you remind us of the terms in the call option? And what would the remaining amount -- what would the remaining 55% cost you? The CapitaSpring, what would the remaining 55% -- what were the terms of the call option and what are the remaining...

CapitaSpring, the call option?

Yes. You've got a call option, right?

Yes. So it's for the -- only the commercial's component. It's the office and retail. So it's -- for 5 years after the completion of the project, they will be at market price. And of course, there's a threshold that's tied to the development cost of the commercial component, yes.

So what would it cost you currently? Have you just adjusted it?

Today?

How much would it cost now based on what you valued it?

The value is $1.94 billion, the completion valuation, right? $1.94 billion.

When we first announced it, the development cost is $1.82 billion. But I think it's something that we are still affirming because although the building is completed, but there's always some ongoing ratification work.

And then the final question is on the bonds that you have that expire -- that matures this year. How long was it? And what tenor are you looking at to -- when you're looking to refinance it for?

How long is the existing [indiscernible]?

Yes, the existing.

We -- actually, we do have -- on our investor center on our website, we actually detail all the bonds information, including the rates. Yes. So we can actually, again, send you the link after this.

So I think we have CLSA, Yew Kiang.

I have 3 questions. The first one is, CapitaSpring, what's the passing yield for -- if you have any estimate? Second is on 79 remote. What's the passing deal as well? The third question is on the merger. When I look at your acquisitions in Australia, I think previously, one of the benefits you mentioned was you can tap on integrated developments. But it seems like -- would it be fair to say that CCT could have done it on its own even without a merger? Can CCT do the acquisitions alone in Australia even without a merger?

Of course, that's quite theoretical, right? Theoretically, yes. Yes, it all depends on how the balance sheet at the point in time, how they look like. That's one decision point, right? Theoretically -- actually, we bought one integrated. The one that is 50% stake, 101 Miller, actually is integrated development with over 20% retail thereabout, yes. So just to correct -- actually, that's an integrated development, yes. Yes. So theoretically, CCT, I think whether it can buy, yes. But in totality, it's $1.1 billion. Whether they can absorb it all depends on where their balance sheet is, yes.

And then the first 2, CapitaSpring?

Passing, do you want to -- the passing?

Because now it's only at 91%, and then we'll be expecting the ramps to come in, in the later part of the year. So we don't really have a figure as of now until it's more fully leased and the costing -- OpEx is more stabilized, right? I think at that point, we'll have better idea of passing yield.

We can't comment on IRR. Okay.

Okay. Now I did mention a more meaningful cash flow will come in only from second half this year for CS, yes.

I think we have Morgan Stanley, Derek, yes.

You mentioned GTO component, 4% to 10% from asset. What would be the aggregate number and where do you see that going to?

Today it's low because the GTO anyway is not very high. What's the other number? I think it's still in the mid-single digit, yes.

0%.

Yes, it's about mid-single digits still.

And going forward, do you see that going towards high single digit or even double?

There are only [ $1 billion ] too high. When we restructure on a select basis, it's not the entire pool, right? So it still will be okay. I mentioned a little more [indiscernible] higher than outgoing. So it's a mixed bag. It's going to be quite a mixed bag. But as a portfolio overall, I don't see it go up very significantly, yes.

And just on tenant sales, you mentioned downtown was 85% of pre-COVID levels in December.

December.

In December, yes. But what about suburban malls?

Suburban, above really.

What was it? Is it like 104%?

105%, yes.

105%.

December. December because -- yes.

How is that tracking this month?

This month, we have not seen the number yet. I think it's not over. But we're seeing more and more people going back to office. December, of course, a lot of -- we are on leave, right? January, we have seen across our portfolio average between 30% to 40% of return rate, yes. Some buildings are higher, in fact, close to 50% really, yes.

And as we return to office on recovery, do you see the suburban mall versus downtown mall outperformance reverse?

Like as I mentioned earlier, we have seen even our best performing on -- BPP, it's already seeing a bit of a traffic decline. But December -- okay, January, to be fair, it's still CNY, right? CNY mix, I think, still -- there's still going to be a CNY shopping spree going on, yes. And CNY, if you go down to Chinatown, it is crowded. So the people are beginning to come out more to look at the CNY specific theme, right? But I think that reverse could happen [ salary ] depends on the guideline. Today, work from home is still 50%, right? If they relax that -- we have seen it before, not just in Singapore, but also in the market. We just went in Sydney. When they reversed that, recovery has been very strong. Last year, December, if you -- last year fourth quarter, if you recall, it was lifted, right? No longer default work from home. We have seen some of the traffic recovering very nicely downtown. 80% plus. Today, we are about 60-ish, right? So we recovered to about 80% plus, yes. So very healthy, yes.

Okay. I think -- yes.

Two questions. You touched briefly on revenge spending. Could you give us more color on this? Where do you see this spending occurring? And also, I noticed in your tenant sales, right? Actually, supermarkets went down in FY '21. Can you give us more color? Because I actually was expecting that to be the reverse.

Yes. So revenge spending in the expensive item is still there. We are buying watches. I think the bigger problem is -- now is the lack of stock. So I think those are still there. We've seen a nice uplift in people buying -- even us. So we have a couple of tenants that are doing okay in Raffles City, yes. Broadly across the board, if you look at the trade category recovery, quite widespread, even home furnishing. Home furnishing, as more and more people are spending on -- whole time at home, so they are looking at upgrading whether your workstation or if they are buying new property, then they're looking at some kind of retrofitting requirements. So we have seen a way of that traction. Still resilient. Supermarket, I don't think it's surprising because we had a very, very strong supermarket in 2020, 2021 because a lot of people are eating in, right? That will potentially reverse when work from home is no longer the so-called day-to-day. It could be a -- instead of 5 days, maybe it's 2 days work from home, 3 days work from office, right? So it could be that reversal where cooking is no longer default. So I think it will affect a little bit of the supermarket. Plus, grocery shopping online is also gaining traction. So I think the supermarket operator, they do face competition from the online -- pure online grocer taking a little bit of market share as well. But they are also going into that space. So we have seen, if you observe [indiscernible] supermarket, you go to -- they actually started to provide home delivery. If you buy a [indiscernible] in a supermarket, they pack there, they'll deliver for you. So try to capture those who feel that they still need to go down and see for themselves the fresh produce, then avoiding all the rest of the items as you go along because they just don't want the hassle of carrying bags. So delivery services, many supermarkets now are providing a default. Even if you go there, you shop [indiscernible], they actually provide free delivery. So I don't think it's surprising that 10 supermarket sales are seeing a little dip on the back of a very high base, yes. But to just put things into perspective, even though the sales drop, especially in suburban, it's still trading at a very healthy level. Still occupancy cost is still very tight, yes.

We have Xavier from Morningstar.

Xavier from Morningstar here. Just want to ask a few more questions on the app. Is the sponsor the owner and the developer of the CapitaStar app and the e-CapitaMall app? And as well as is there a delivery partner for the app? Like do you have your own -- do you have a partner with like, say, [ Deliveroo ] and maybe some other logistics provider? Or do you have your own delivery team? And then what is the long-term strategic target that the management is hoping to achieve? is the app -- is this app planned to be really just supplementary to the tenants? Or do you foresee that sometime in the future, given the network of malls that you have, that you could also potentially compete within the same space as like Grab and what Shopee is doing?

Okay. That's a very profound question because it's not an easy answer. To begin with, the app is -- the infrastructure is owned by [indiscernible], right? We are the end user. We as in the REIT, we, obviously, would have to pay something for the usage of the application. So there will be manpower required to run that. So we have to cover some of the manpower costs, right? We also come out with marketing dollar because the key thing about the CapitaStar program is about reaching out to a consumer to earn point. To incentivize them to shop in our mall, we give them points. The points is actually marketing dollars. So it comes from our marketing budget. So we also pay that into that pool. And the operator, which is a sponsor, will utilize the pool to go out with a marketing campaign. So we are paying for that, yes. So our objective is really to supplement. At the end of the day, we are still a physical asset owner. We want to ensure we have the opportunity to look at whether -- helping tenants who are not in this journey, right? Not all tenants are -- of course, due to the pandemic, they are a little bit more exposed to the e-commerce world. But you'll be surprised, a lot of tenants don't even know how to go on that journey. So this program is to allow them to be able to hedge on, on this e-commerce space. Hopefully then they'll be a little bit more savvy and they do the transaction within our ecosystem. So that's the whole objective. How big can they go? No easy answer because it's naturally a quite expensive venture that the sponsor [indiscernible] because it's ever-changing. Like the technology requirement is always ever-changing. While we want to ensure that we have a role to play on the online/off-line omnichannel, which a lot of tenants are themselves are embarking on, so we as a landlord, how do we facilitate that? One of the options looking at our platform to allow them to effectuate that so that they can do the transaction online, can be part of our ecosystem, give the optionality to make payment whether on the spot or make it through the system. If they want to pay through the system, yes, we can do that using our e-voucher hopefully. So they can do that through our e-voucher. Then it's all in that ecosystem that we are trying to create. How big that can grow? If you look at the whole ecosystem within the CICT retail, our total tenancy check is north of $3 billion, right? Today, e-voucher is about $100 million. So that is still a drop in the ocean, still very small. That's on the [ e-vault ] of the voucher application. If you go down specific, the Capita3Eats or the e-CapitaMall is even smaller. So in the scheme of things, physical mall is still going to be very critically important for us as the main source of revenue because it's where we charge [indiscernible] and in rent. And then we capture the GTO as much as possible. Today, GTO, even in the whole island wide, is 16% thereabout. Online sales versus -- you take away the base from the motor vehicle on -- you take away, then it's not counted as retail sales, right? It's about 16% online, yes. It's still a large majority. 84% is still on the physical store. So that's where I think our main revenue source is. So where to find the trade-off because marketing dollar, you can't go unlimited, right? So even the marketing dollar, it must be translated to a point where the revenue generation from a ramp perspective make a lot of sense. So it's a difficult complicated answer to give you today, but that's the whole dynamic you're looking at. We try to provide that possibility for our retailer. Some retailer are really quite advanced. They will be the marketplace, they say Shopee or this, right? We try to see whether we can fit into that picture. We certainly don't have the currency capital to compete with the Shopee because they are different. [ Like Shopee say ], they can burn. Market is forgiving. And so we can't burn. Market will not be so forgiving. That's the reality, yes.

[indiscernible]

Two very quick questions, a follow-up. First is on -- so going back on the acquisitions again. You said you're looking for Singapore assets. But given where cap rates are right now for prime commercial assets and looking at your cost of capital and your gearing levels at this point, how are you going to make the DPU accretion? Would you be open to rental support or some structuring? How would that work?

Yes. I think we have to consider that possibility, tying to cost to what extent that support and then what's the logic behind it. So we need to be clear what that stabilized formula look like and what -- on what basis that stabilized form can reach. So there should be a certain reference point. I think we will probably have to take that into consideration as part of the scheme. I'm not saying every deal we have to do that. But certainly, it's something that we have to look at a different configuration, yes. Having said that, I think our cost of debt is still not expensive, even though the interest rate has gone up . So we still have that base effect. Our base is huge, right? Now today, $22.5 billion. So if the -- Australia are coming, I think we are looking at $22.8 billion, probably around there. So we have a big base of every 1 percentage point increase in gearing represents $200 million. So it's -- we had the scale effect, when we say that, to do a deal, yes.

Sorry, the quick second question is on your -- the latest acquisition in Australia, the one you announced that just [indiscernible] a 50% stake. How did this deal come about? And could you briefly give us some color? And is there any option to acquire the remaining 50% from Mirvac? And why is Mirvac selling?

It's not Mirvac.

So it was the market opportunity that came about. No coincidence that -- pure coincidence that the seller was the same one who bought OGS. Pure coincidence. It was not negotiated. Timing are completely different. OGS was going through a sales process. We have a very competitive bidding exercise. The Mirvac, that one is actually through an opportunity that surfaced through the market. So that's how we got more info. There were other interested party also. But eventually, we were the final preferred one. Whether we will have the right to -- as any JV, there's always this JV agreement that would give each partner the preemptive. So that's not unusual. Why Mirvac is not selling, perhaps they may at some point. I don't know. We only know once you take over and we consummate that partnership together, yes.

Okay. I think BT. Jude?

I'm Jude from The Business Times. Circling back to the BJs that you're setting up. Beyond Germany and Sydney, are there any markets that you're looking at? That's one. And in terms of proportion of the portfolio from Singapore against elsewhere, is this something that you're targeting? And lastly, on acquisitions, what kind of levels are you expecting for FY '22? Are you expecting to keep pace with last year?

Okay. I think the immediate focus is these 2 markets. We try to deepen our presence. I mean Australia, of course, is still not completed yet. Over time, we want to deepen our presence. And we have an average about $1 billion [ each ]. This market is not big, right? So we can ease it up. I think we can afford to double it, but not immediate. Then -- so I did mention the priority this year is to look at Singapore. So I think it's the opportunity of servicing Singapore. So we'll focus a bit of our resources looking at this opportunity. How the ratio look like, as a guide, we're saying that we are not going to go beyond 20% of our overall portfolio outside of Singapore so that investors have a sense. When they're buying CICT, at most, it's 20% outside the market that they may not be able to evaluate. Huge proportion is still going to be Singapore. Today, if Australia is completed, the 2 combined represent about 9%. But if we add more in Singapore, then you get diluted again, right? So it is iterating -- iterative kind of a number. And going forward, it will be like that. 2022, it may be intensified potentially. We are still working through the details, yes.

Okay. Thank you, Tony. I think just the last -- for the last question, I'll just ask a question from the webcast. I think it's also a part about the strategy. So since the enlarged development headroom was cited as a benefit of merging CMT and CCT, will we be keen to undertake development projects on our own balance sheet?

Certainly, it will be on a very asset-specific possibility, right? We do have the headroom, right, the headroom to do it in terms of the volume exposure. 10% of a big base is huge, right? We can do it. Then we have to measure against the other options, right, whether we want to deploy that because it would be a driver. Development is a good thing, but it will be a drag for a while on your performance because it's non-income-producing, right? So we have that in mind, yes. But we certainly will be open to that because everyone, obviously, like the REIT, will participate on the development uplift. Certainly, we like that as well. But from a cash flow perspective, this is a trade-off. We definitely got to consider it in totality. And all depends on the specific assets we are looking at. Some is not possible for us to participate because if it's high -- if it's the best use case in allocation as a residential component, that's certainly something that [ MAS ] will not allow us to do it. So unless you are built for rental purpose, which today, I don't think the market is there yet, yes.

Okay. Due to time, I think we have to end today's session. For those present here, please hold on a while. So we have -- I just want to address those on the webcast. So we have come to the end of our briefing. Thank you to all of you who have taken time to join us. So on behalf of the management, we would like to wish everyone a Happy Lunar New Year. [Foreign Language]. Thank you.

[Foreign Language]